Can You Gift A House To Family?

Can you gift a house to family

There are various reasons why you might want to go about gifting a house to family members. But how exactly is this achieved – and what are the key pointers you should be aware of? In this article, we’ve outlined the reasons you might want to transfer ownership, how to gift a property, and the tax implications involved.

Why gift a property?

The two most common reasons for gifting a house to family are divorce and avoiding inheritance tax. Read on, to discover more about each, below.


If you’re going through a divorce, you might choose to gift your shares of the family home to your spouse.

Even if you sell your house quickly through a cash buyer, finding a new home each can take many months and cause unrest and severe disruption to your children’s lives during an already complicated period for them.

If you lived together during the tax year in which you are transferring ownership, you won’t have to pay any capital gains tax on the gift, so try to come to an arrangement that takes this in mind.

Helping your children get on the property ladder

Gifting a house to your children can be a great way to help them get on the property ladder. It could be a property you’ve always owned, or you could be purchasing their first home for them after leaving school or university.

For your children, this can remove the stress of having to save for a deposit and spend years renting to no avail and limited alternative options. However, if the property is going to be under your name before transferring ownership, take note of any rules and restrictions around buying a second home.

Inheritance tax

Inheritance tax is a duty charged on all property valued over £325,000, at 40% of everything over this threshold, and is paid by the beneficiaries of the deceased’s will. This means, for example, if you inherit a home worth £500,000, you will have to pay 40% inheritance tax on the £175,000 that falls above the threshold (£70,000).

However, it is possible to ensure your children receive the full value of your home, by gifting it to them and transferring ownership at least seven years before you pass away. The only criteria are that you are of sound mind, the property is not tied to a debt, and you are the recognised owner according to the Land Registry.

If you do, unfortunately, pass away before the seven-year period expires, though, your beneficiaries will be subject, instead, to a sliding scale of inheritance tax called ‘tapered relief’. If you pass away within:

  • 3 years, they will pay 40% inheritance tax on the value above £325,000.
  • 3-4 years, they will pay 32% inheritance tax on the value above £325,000.
  • 4-5 years, they will pay 24% inheritance tax on the value above £325,000.
  • 5-6 years, they will pay 16% inheritance tax on the value above £325,000.
  • 6-7 years. they will pay 8% inheritance tax on the value above £325,000.

How to gift a property

Now you’re aware of the most common reasons for gifting property, it’s time to learn how. We’ve explained what a deed of gift is, as well as the process involved in transferring ownership.

What is a deed of gift?

A deed of gift is a legally binding document that demonstrates that one party is voluntarily transferring ownership of property to another. It comes with no expectation of payment, and can refer to anything – including a house.

The process of gifting a house

Because gifting a house is a legal process, it’s always advised to contact a lawyer with experience in this particular field. They will explain the process in detail, which should follow something similar to:

  1. Draft your deed of gift

Because you’re gifting property voluntarily, you will need to create a personalised document that outlines your choice and confirms that you aren’t being coerced.

  1. Beneficiary accepts the gift

The person receiving the property should sign the deed of gift, to record accepted possession. The beneficiary must be over 18 years of age to accept a deed of gift themselves, otherwise a legal guardian can accept on their behalf.

  1. Property is reassigned

Once both parties have agreed to the deed of gift, the transfer of property is legally binding and the beneficiary will assume full possession. After ownership has transferred, the gift cannot be overturned, so, as the donor, make sure you’re certain you’re satisfied with the action.

Tax implications of gifting property

Gifting property to children might mean they don’t need to pay tax on inheriting the home, but there are other applicable levies that you should be aware of. For instance, stamp duty and capital gains tax generally apply, just like a traditional house sale.

Stamp duty on gift of property

Whether you’re gifting property to children or a spouse/partner during divorce, stamp duty will only need to be paid if there are any outstanding mortgage payments. If there are still outstanding payments, the recipient will need to take on the mortgage and pay stamp duty at the standard rate.

However, if you’ve paid off your mortgage and own the property outright, you can freely include it in a deed of gift with no stamp duty required.

Gifting property and capital gains tax

Unlike stamp duty, capital gains tax is almost always applicable when gifting property to children or family members. Although it works slightly differently to a traditional house sale, because there is no exchange of fee. Instead, capital gains tax is charged at the market value of your property.

Fortunately, to spread the cost, HMRC usually permits you to complete capital gains payments over ten equal instalments. There are a couple of common cases that don’t usually require you to make any capital gains tax payments at all:

  • When gifting property to your spouse or civil partner
  • When gifting property to a charitable organisation

Hopefully, we’ve offered a little guidance around how to gift a property and the tax implications involved. For even more expert property guidance, check out all the latest over on our blog.

We are proud members of...

  • NAPB
  • RICS
  • The Property Ombudsman
  • Trading Standards

We are proud to be the most regulated property buyer operating in the ‘Quick House Sale’ industry. We are an active member of the NAPB (National Association Of Property Buyers) and are RICS regulated, which means you can have every confidence of selling your home with us quickly & easily.